TOP 4 Trends in Taxation for 2024

Inside View

Judit Jancsa-Pék, partner, senior tax advisor, LeitnerLeitner

There are no boring years in taxation. 2024 also promises exciting challenges for anyone involved in tax affairs.

The Hungarian National Tax and Customs Administration (NAV) has launched the eVAT/M2M that helps taxpayers prepare their VAT returns. This presents a new level of tax digitization. It also reflects that the increasing standardization of tax data, not only for VAT, but also employment, direct taxation and transfer pricing, offers significant ammunition to NAV. Through knowledge-based machine learning, the tax authority has started to build up predictive analysis models for supporting the classical risk assessment methods that will undoubtedly lead to more effective tax investigations.

Another favorite field of the tax authority is transfer pricing, as proven by recent record penalties. Nowadays, even more severe new rules (such as median adjustment and obligatory reporting requirements) generate many practical problems and could lead to double taxation in related party transactions. Moreover, the economic issues present a particular difficulty for so-called low-risk domestic subsidiaries because, according to arms’ length principles, they should be entitled to a stable and moderate profit despite a loss at the group level. The increasing attention of NAV requires even more caution than usual.

GloBE taxation presents a new challenge for corporate groups and imposes a top-up tax where the effective tax rate is below the agreed minimum of 15%. As Hungary is a capital importer, where the subsidiaries of numerous GloBE-affected multinationals are located, and as it maintains the low level of a flat 9% CIT taxation as part of its international tax competitiveness, this is becoming a hot topic this year. The complexity of the issue requires the joint support of professionals in tax and accounting concerning tax projections and deferred taxation. As Hungary still offers tax allowances allowable within the GloBe regime, it remains worth looking at the investment potential here.

Last but not least, it is worth mentioning one of the biggest problems businesses face and offering a solution. Nowadays, many struggle to attract a talented, well-educated workforce. Retention and motivation supported with tax instruments, for example, Hungarian employee share ownership programs, may help engagement. These could be implemented with the assistance of LeitnerLeitner’s experts, as you can also find a solution to the previously mentioned tax challenges within our team.

This article was first published in the Budapest Business Journal print issue of March 8, 2024.

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